Marketing to Women: Daily Deals Losing Their Allure

It looks like daily deals are being dealt a double blow – their business model is flawed and consumers are losing interest at the same time. The average revenue per customer at Groupon fell to $63.96 in the 12 months ending September 30 from $76.49 a year earlier. Merchants are finding out that their effectiveness is waning. A recent Raymond James survey of some 115 merchants that used daily deals services during this found that 39 percent of merchants said they were not likely to run another Groupon promotion over the next couple of years.

Reasons cited by businesses not choosing to run deals again were:

1. high commission rate

2. low rate of repeat customers gained through offering a promotion

3. losing money on the promotion

4. daily deals seen as less effective than other forms of advertising

As retailers cool on daily deals and are turning to other methods of marketing to women, companies like Groupon and Living Social are trying to reinvent themselves through ventures such as Groupon Goods and LivingSocial’s Shop that offer more traditional offers. Currently Groupon holds about 50% of the daily deals market.